The Commerzbank portfolio, known as Hypothekenbank Frankfurt, includes £2.7 billion in high-quality institutional assets throughout the U.K., with a focus on London, as well as £1.3 billion of nonperforming assets. Private equity firm Lone Star Funds will manage the nonperforming assets with financing from Wells Fargo, the San Francisco-based bank said.

“Hypothekenbank Frankfurt’s 20-year history in London, their recognition as...